Petitioner
Ernesto Z. Giduquio together with one Antonio T. Corpuz were charged with
violation of Section 3 (e) of Republic Act No. 3019, as amended, in Criminal
Case No. 23720 in an Information that reads as follows:

That
in or about the year 1992, and for sometime subsequent thereto, at Cebu City,
Philippines, and within the jurisdiction of this Honorable Court, above-named
accused, public officers, being the Vice-President and Manager of the Small
Island Grid, respectively, National Power Corporation (NPC)-Visayas, Cebu City,
in such capacity, were in-charge of the management, direction, monitoring and
control of the operation of the various diesel plants of cooperatives in the
Island Grid, while in the performance of their official functions and taking
advantage of their public positions, conniving and confederating together and
mutuallyhelping with (sic) each other,
with deliberate intent, with manifest partiality and evident bad faith, did
then and there willfully, unlawfully and feloniously: split or cause the
splitting into twelve (12) schedules/phases of works the pakiao contracts and
job orders, making it appear that the cost of each, does not exceed P100,000.00;
award or cause to be awarded to one and single contractor the 12 schedules of
the construction project; execute or by executing the said contract despite the
fact that it was outside their scope; inflate the cost estimate to over
369.71%; award or cause the awarding of the contract to a contractor without
the benefit of a public bidding; have the project inspected by the SIG people
to the exclusion of the OPO Engineers and or cause the payment of the contracts
despite several deficiencies in the construction works, thus accused, in the
discharge of their official functions had given unwarranted benefits, advantage
or preference to themselves and the contractor, to the damage and prejudice of
the government.

The
prosecution established that in 1993, the Regional Director of the Commission
on Audit (COA) of Cebu ordered a fact-finding
inquiry on the alleged irregularities committed by certain officials of the NPC
in the construction of power plants in the three islands of Cebu,
namely, Olango, Guintarcan and Doong. After a review of the job orders, canvass
papers, canvass of bids, pakiao labor
contracts, NPC existing relevant policies and other pertinent documents, Alexander
Tan, resident auditor of NPC, Visayas Regional Center and a member of the
fact-finding team, prepared and submitted to the Cebu City COA Regional
Director a report embodying the following findings:

a) there were splitting of contracts in which
violated NPC Circular No. 92-34 which mandated that one project should be
covered by one contract;

b) the
Abstract of Canvass revealed that there were three other groups of workers who
were interested hence, public bidding should have been conducted;

c)
the person who conducted the spot canvass was under accused Giduquio;

d)
NPC policies prohibited the construction of a structure under the pakiao system;

e)
the cost estimates were inflated;

f)
Giduqio approved the Certificates of Inspection and Acceptance and certified
that the projects had been satisfactorily completed.Full payment to the contractors were made on
the basis of his certifications;

g) Giduqio
also certified that the expenses were necessary, lawful, and incurred under his
direct supervision, the prices were reasonable and were not in excess of
current rates in the locality, and that it was only after this certification
that payment for the three projects were processed; and,

NPC
Vice-president Antonio Corpuz likewise created a task force to inspect the
three power plants. The task force found that there were indeed deficiencies in
the three projects. Loubain Monterola, a mechanical engineer of NPC-Cebu
Regional Office, and the designated team leader of the task force, testified
that after due inspection of the construction of the power plants, he and his
team had observed some deficiencies in the actual construction of the projects.
He, however, said that the deficiencies were minor ones and in a follow-up
inspection in 1995, saw that they had been corrected.[3]

After the prosecution rested its
case, both the accused demurred to the prosecution’s evidence.

On
30 October 2001,
the Sandiganbayan granted the demurrer to evidence filed by Corpuz but denied that
of petitioner’s, leaving the latter as the lone accused in the case. In the
same decision, the Sandiganbayan declared petitioner innocent of the first,
second, third and sixth acts alleged in the Information. However, it found
sufficient evidence against petitioner with respect to the other three
remaining acts. Consequently, petitioner was required to present evidence to
negate his presumptive guilt in respect to the three remaining charges.[4]

For
his defense, petitioner and Thomas Agtarap were presented as witnesses.

Petitioner
testified, among others, that a bidding was not necessary for a pakiao contract. Moreover, he alleged
that there was no competition in the construction of the three projects. He
also stated that he had merely dispatched Senior Engineer Villacarlos to
conduct a spot canvass and that the latter had asked from among the local
residents if they could perform the job. He also averred that the persons
listed in the spot canvass had not made any offer.

Petitioner,
however, admitted that he had recommended the full payment of the workers
despite the fact that the construction had not been fully completed as the NPC
had incurred delay in the delivery of the construction supplies. Petitioner stated
that the projects had been only less than 1% incomplete and would have taken
only three days to complete. He also asserted that he had taken the following
measures before recommending the full payment of the workers, to wit: (1) he
had evaluated the projects and found that 99% had already been accomplished; (2)
the five group leaders had signed a Letter of Guarantee that they would resume
work once the materials have been delivered; (3) he had indicated in the
Certificate of Inspection and Partial Acceptance that the contractor would be
responsible to complete the work (and in fact, said deficiencies had been
completed).[5]

Agtarap,
then the Vice-President of NPC-Engineering Department, testified that he had
certified all the spot canvasses prepared by petitioner; that the engineering
committee had evaluated all documents forwarded by petitioner and that the
petitioner did not participate in the splitting, preparation and award of the
contract to a particular contractor as all contracts had been made in the head
office on the basis of the recommendations of the engineering committee.[6]
Agtarap also explained that a formal public bidding was dispensed with because
of the absence of competition and the urgency of the matter.[7]

After trial, the Sandiganbayan held
that there was reasonable doubt that petitioner committed the fourth act, i.e.,
that of inflating the cost estimates.[8]The Sandiganbayan, though, found petitioner
guilty of having committed the fifth and seventh acts, i.e., awarding the
contracts without public bidding and causing the payment of the contracts
despite several deficiencies, respectively. It disposed as follows:

With
the denial of his motion for reconsideration, per the graft court’s resolution
of 10 November 2004,
petitioner is now before us via the instant recourse.

In his Memorandum[10]
dated 2 September 2005,
petitioner asserts that there was no need for a public bidding in the award of
the contracts and that in any event, he had no participation in the award
thereof. He also maintains that he was justified in causing the payment of the
contracts despite the non-completion of the construction work.[11]

There is merit in the petition.

The law violated is R. A. No. 3019,
Section 3(e).It provides as follows:

Sec.
3. Corrupt practices of public officers.–In addition to acts or
omissions of public officers already penalized by existing law, the following
shall constitute corrupt practices of any public officer and are hereby
declared to be unlawful:

x x
x

(e)Causing
any undue injury to any party, including the Government, or giving any private
party any unwarranted benefits, advantage or preference in the discharge of his
official administrative or judicial functions through manifest partiality,
evident bad faith or gross inexcusable negligence.This provision shall apply to officers and
employees of offices or government corporations charged with the grant of
licenses or permits or other concessions.

The following elements need to be
proven in order to constitute a violation of Section 3(e) of Republic Act 3019,
viz:

1.
The accused is a public officer discharging administrative or official
functions or private persons charged in conspiracy with them;

2. The
public officer committed the prohibited act during the performance of his
official duty or in relation to his public position;

4.
His action caused undue injury to the Government or any private party, or gave
any party any unwarranted benefit, advantage or preference to such parties.[12]

There are two ways of violating
Section 3(e), Republic Act No. 3019, to wit: (a) by causing any undue injury to
any party, including the Government; (b) by giving any private party
unwarranted benefit, advantage or preference.The accused may be charged under either mode or under
both.

The court a quo held that petitioner violated the above-quoted law by
awarding or causing the award of the pakiao
contracts without public bidding and causing their payment despite
deficiencies in the construction works. We hold otherwise.

For one, the Court believes that the
public bidding was reasonably dispensed with due to the urgency of the matter.
Agtarap, petitioner’s superior, pertinently stated that:

CHAIRMAN:
So notwithstanding the fact that under the circular, if there are two or more
pakyaw contractors who are offering their certain bids, you have to conduct a
bidding, you disregard that condition because according to you this is an
urgent matter which, under the law, you are authorized to disregard that
particular provision in that circular?

T.
AGTARAP: In that sense…

CHAIRMAN:
That is what you are telling us, right, because of the urgency of the project?

It is well to recall that in the
early 1990’s, the country suffered from a crippling power crisis.[14]
Power outages lasted 8-12 hours daily and power generation was badly needed.
Addressing the problem, the NPC sought to attract investors in power plant
operations by providing them with incentives, one of which was through NPC’s
assumption of payment of their taxes.[15]
For the same purpose, NPC reconditioned existing power plants. In the small
islands, it put up new power plants.

It likewise bears emphasis that
Agtarap confirmed petitioner’s non-participation in the award of the pakiao contracts, to wit:

ATTY. CASTEL:

Mr. Witness, when
the pakyaw contract was made, was the name of the contractor already
typewritten there?

A:
Yes, sir.

Q:
How about the contract price?

A:
The same thing, sir, because that
was already defined and identified.

Q:
What was the participation of Mr.
Giduquio in the preparation of the contract?

A:
I mentioned that all these things
were prepared in the Head office and therefore the evaluation, the typing…

CHAIRMAN:

… So accused
Giduquio has no participation whatsoever to the preparation of that contract,
right? That’s according to the witness.

ATTY. CASTEL:

What was the
participation of Mr. Giduquio in the awarding of contract to a particular labor
contract?

A:
Since the award is done in the Head
Office, Giduquio did not participate in the awarding of the contract, sir.

Q:
By the way, Mr. Witness, who caused
the labor schedules.. will you inform us who caused the pakyaw labor contract
to be divided into different schedules?

A:
Sir, the different stages were
already part of a typical concept made by the head Office as also required by
us to check the different schedules (1) to expedite the work in far-flung
areas; (2) the possibility that we can get labor within the community. That is
why the decision of the management to have different schedules for this
project.

And most importantly, it was
petitioner’s superiors who ordered him to implement the pakiao contracts.[18]

Anent the issue of premature payment,
the Court believes that petitioner is justified in having caused payment as the
construction works have been substantially finished at the time of the
acceptance. Petitioner testified that:

Q:
Why is that so? Why did you recommend
payment despite the fact that the projects were not yet fully completed?

A:
Okay, with this chart I prepared, you
will notice the project consisting of twelve (12) schedules. These were broken
down into different activities, like Schedule 1, it was completed. In other
words, of the twelve (12) schedules, eight (8) were completed and only four (4)
were not. Before payment was made, I evaluated the project as to the physical
accomplishment. The report was based on Schedule 5 which was already 97.99%
accomplished at that time. Schedule 6 was likewise 90.6 accomplished; And
schedule 7, 99.6 % accomplished, so that Schedule 12 was already 99.12
accomplished. In other words, the total relative weight of the remaining level
cost is 99.5%, or .39% is left. Considering the total project, what is this?
This means the total level cost to complete the project is only P1,850.00
or the total is P267,025.00, divide this by this, the remaining cost of
labor against the total contract will amount only to .39% or less than .25%.[19]

In any event, the construction works
were eventually completed proving lack of injury to the government. Significant
of all is the lack of proof that petitioner committed the supposedly prohibited
acts with manifest partiality and bad faith. To the contrary, the Court finds
that petitioner in causing the payment was moved by sympathy for the plight of
the workers, even while imposing safeguard measures for the government which
belies claim of partiality, viz.:

Q:
Considering that you [are] already
recommending payments to the workers and there were still some of the materials
to be installed, what preliminary measures did you take then?

A:
You will notice that before I
recommended payment, there was an evaluation of the project, whether it was
completed or not. I tried to find out if it was really reasonable to pay the
workers. And when the project was evaluated, it was already 99. 9%
accomplished.

Q:
And so, what did you do?

A:
So, out of humanitarian
consideration, I sympathized the plight of the workers, they are just ordinary
fishermen, ordinary farmers, but some of them are skilled carpenters. I asked
from them the letter of guarantee; that should the materials be delivered, they
would resume the work. And so, when the materials were delivered, they
performed and completed the job, and not only that, in the Certificate of
Inspection I issued, it was so worded that it shall be the responsibility of
the contractor to complete the work…

A:
I am referring to this Certificate
of Acceptance. This Certificate of Inspection and partial Acceptance which in
no way relieved the contractor of the responsibility and obligation to
accomplish the work, as required by the NPC. So, there were precautions.

AJ
FERRER:

You mean to say
that you have them signed the document before you paid for the whole project?

WITNESS:

Yes, your Honor.

AJ
FERRER

Q:
You are admitting that even before
the projects were 100% accomplished, you paid the pakyaw contractor?

WITNESS:

Something like
that, your Honor, out of humanitarian reason.

AJ
FERRER:

Q:
And subsequently, when the
materials came, they completed their work, without any extra cost from you?

WITNESS:

No, your Honor, it
took about three (3) months after they completed the project that they received
the payment. I was so worried., your Honor, because while I am receiving P32,000.00
monthly salary, and these people were in hunger, so x x x[20]

In order to be held guilty of
violating Section 3(e), R. A. No. 3019, in this case, the prohibited acts of
the petitioner must have been done with evident bad faith or with manifest
partiality. In Sistoza v. Desierto, et al,[21]we held that “mere bad faith or
partiality are not enough for one to be held liable under the law since the act
of bad faith or partiality must be ..evident or manifest, respectively.” Nowhere
in the records of this case is such bad faith evident or partiality, manifest.
In the absence of these elements, petitioner cannot be convicted of the offense
charged.

Thus, while it is true that the "factual findings of the
trial court are entitled to great weight and are even conclusive and binding”
to this Court, this principle does not apply here.The findings of facts of the Sandiganbayan
are not sufficiently established by evidence, leaving serious doubts in our
minds regarding the culpability of petitioner.

In sum, we find that the prosecution
failed to prove by evidence beyond reasonable doubt the guilt of herein
petitioner for violation of Section 3(e) of Republic Act No. 3019, as amended.

WHEREFORE, the
petition is GRANTED. The Decision
dated 30 August 2004
of the Sandiganbayan in Crim. Case No. 23720 is REVERSED and petitioner is ACQUITTED
of the offense of violating Section 3(e) of Republic Act No. 3019, as amended.
No costs.

SO ORDERED.

DANTE
O. TINGA

Associate Justice

WE CONCUR:

CONCHITA CARPIO
MORALES

Associate
Justice

Acting Chairperson

PRESBITERO J. VELASCO, JR.TERESITA LEONARDO DE CASTRO

Associate JusticeAssociate Justice

ARTURO D. BRION

Associate Justice

ATTESTATION

I attest that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.

CONCHITA CARPIO MORALES

Associate
Justice

Acting Chairperson,
Second Division

CERTIFICATION

Pursuant to Section 13, Article VIII
of the Constitution, and the Division Acting Chairperson’s Attestation, it is
hereby certified that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.

REYNATO S. PUNO

Chief Justice

*Acting Chairperson as replacement of Justice
Leonardo A. Quisumbing who is on official leave per Special Order No. 618.